Good: 1) Ratings kept at Aa3 with stable outlook. Keeps their frnaschise to underwrite more munis. 2)Downgrade to A2. This will force management to release capital since they have far more than what they need to keep an A2 rating. Would see share buybacks or bigger dividends. Run-off scenario may happen to
Bad: Downgrade to A1. With that rating new business underwriting will shrink but management will not feel the need to go into runoff or release capital to shareholders. The company will basically be in a standstill for years to come.
Third scenerio : In the last conference call they said they have a subsidary with a pristine balance sheet that could become a muni insurer and they would not have Moody's come in and rate them, just S&P and Fitch. The reasoning was that Moody's criteria is based upon new business earnings and not ability to pay or balance sheet metrics so why have them come in to do the same stupid thing.